# Appeals Court Upholds Pentagon’s Supply-Chain-Risk Designation of Anthropic

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/regulation/24553
Published: 2026-09-27T07:10:43.000Z
Updated: 2026-09-27T07:10:43.000Z
Section: Regulation

> A 2-1 ruling upheld the Defense Department’s decision to bar Anthropic’s Claude from military use after the company refused to remove two safety restrictions.

A divided U.S. appeals court upheld the Pentagon’s designation of Anthropic as a supply-chain risk, blocking the company’s Claude artificial intelligence model from use by the military and defense contractors.

The D.C. Circuit ruled 2-1 on Sept. 25 that the Defense Department had sufficient grounds to treat Claude’s usage restrictions as a national security risk under federal supply-chain law. The majority said the government did not need to prove Anthropic intended harm; its ability to limit Claude’s use in defense systems was enough for the designation.

The dispute followed a $200 million Pentagon contract signed in July 2025. Negotiations over deploying Claude in the department’s GenAI.mil environment broke down after the Pentagon demanded access for all lawful uses. Anthropic maintained restrictions against fully autonomous weapons and domestic mass surveillance.

The designation took effect March 3 after Anthropic declined a Feb. 27 deadline to withdraw the limits. The Pentagon later excluded Anthropic while signing artificial intelligence agreements with seven other technology companies.

The panel stayed the ruling’s effect, leaving Anthropic able to request rehearing, seek a full-court review or petition the Supreme Court. A separate federal judge in San Francisco previously ruled that another Pentagon designation against Anthropic violated the First Amendment.